Softbank disconnects from British tech venture

THE Japanese investment company Softbank has sold off the rump of its Ukbased gadgets business after a multibillion-pound bet on an internet-enabled world failed to pay off.

Softbank has offloaded its Glasgowbased subsidiary Pelion to Scottish

Equity Partners, in a retreat from its dream of dominating a future market where one trillion devices from cars to kettles would be connected to the internet.

Softbank took control of the company following a £27m deal in 2018, merging it with British chip designer Arm. The rump now sold to Scottish Equity Partners employs 65 people and includes an ESIM division, which produces virtual SIM cards that provide mobile connectivity to smart devices.

Softbank’s ambition to control the socalled internet of things also drove its £24bn takeover of the British tech crown jewel Arm Holdings in 2016.

It was hoped that Arm would become a leading designer of the microchips needed for connected devices but this failed to happen. Softbank announced in 2020 that it would sell Arm to Nvidia for $40bn (£35bn), but excluded its internet of things division.

This deal later fell through and it is now aiming to float the business early next year. The Arm takeover was regarded at the time as a sign of the UK’S post-brexit weakness, coming after a sharp fall in the pound reduced the cost of buying British assets for international investors. It was agreed by Arm’s chairman Stuart Chambers in the Turkish resort of Marmaris when Softbank’s founder Masayoshi Son interrupted his holiday with a proposal to take the business off the FTSE 100.

Mr Son flew into Turkey on a private jet and the pair struck a deal over lunch.

Arm was initially regarded as one of Softbank’s biggest coups, but the Japanese investor later decided to sell it to raise money following losses elsewhere.

Scottish Equity Partners was previously the biggest investor in travel site Skyscanner, which was sold to China’s Ctrip for £1.4bn in 2016. It declined to comment on the financial terms of the deal.

Tim Ankers, of Scottish Equity Partners, said: “[Pelion] has built a leading connectivity management platform ... and the number of cellular connected devices is forecast to grow exponentially.”